South Africa’s Tourism Industry: Next Stop, Recovery?

By Devon Maylie

Tourism business Zulu Nomad expected 2020 to be a banner year as it prepared to launch a digital marketplace to connect small businesses in Southern Africa with international travelers. Then, COVID-19 hit.

“We’ve had to put plans on hold, but we also have to keep an eye on the future beyond COVID-19,” said Zulu Nomad founder Phaka Hlazo. “That’s what we’re also telling other small businesses so that we can come out of this.”

For most tourism businesses in South Africa—from hotels and lodges to guides and transport firms—a   global tourism shutdown has dried up revenues for the foreseeable future, though fixed costs remain. In South Africa, tourism generates 740,000 direct jobs and more than 1.5 million indirectly. Small businesses make up around 80 percent of the travel and tourism industry. Many of them are on the brink.   

Of course, South Africa’s tourism industry isn’t alone. Tourism accounts for 7.1 percent of Africa’s GDP and contributes $169 billion to the continent’s economy. The World Travel and Tourism Council estimates 100 million tourism-related jobs have already been lost globally, including nearly eight million in Africa, due to the COVID-19 crisis.

Many tourism sector businesses will not survive; others are adapting the best they can.

For example, Hlazo has delayed the launch of Zulu Nomad’s digital marketplace by several months and began running webinars for tourism colleagues so she can continue helping the industry prepare for a more digital future.

“We realize there’s no opportunity to monetize anything at all now right now,” Hlazo said. “But we all need to understand the opportunities for when the economy recovers and travel restrictions are lifted, so as a collective we can hit the ground running.”

Data for Impact

A survey published in April by South Africa’s Department of Tourism, the Tourism Business Council of SA, and IFC revealed the anguish of South Africa’s tourism sector. Of the survey’s 1,600 respondents, 58 percent said they couldn’t make their loan repayments in March, while 54 percent said they couldn’t cover their fixed costs. Half said they were forced to slash wages for more than half of their staff.

Collecting data through surveys is a critical first step to help the industry understand the effects of COVID-19 on tourism businesses—and then to respond with targeted solutions. IFC will conduct two more surveys in South Africa in the next 12 months with the tourism sector.

“The sector must consider a long-term roadmap to move through recovery, and a sector re-boot that sets it back on a path to growth – and not just back on the pre-COVID-19 path,” said IFC Country Manager for South Africa, Adamou Labara. “There is an opportunity here to re-position South Africa in a new global economy – as a resilient destination.”

Across sub-Saharan Africa, IFC is working with existing partners in the tourism sector to help them navigate the immediate crisis and plan for recovery. In Ethiopia and Zimbabwe, IFC helped establish a dedicated communications platform to provide clear messaging to consumers about the preparedness of the destinations – and build trust with the travel trade to enable a better recovery.

In Côte d’Ivoire, IFC is supporting SMEs in the hospitality supply-chain to adapt their business models to survive the next 12 months. In Rwanda, IFC is supporting the development of the domestic and regional tourism markets, for greater resilience of the sector.

Meanwhile, In South Africa and elsewhere in the region, IFC is discussing how it can apply some of its global $8 billion fast-track financing to support private-sector clients to sustain economies and protect jobs during this unprecedented global crisis.

Preparing for Recovery

For Jabu Matsilele, who runs Johannesburg-based Buja Tours and Safaris with his wife and cousin, communication and creative solutions will underpin the rebuilding phase, which he hopes comes soon: the dozens of drivers and tour guides the company contracted prior to COVID-19 are now all out of work.

Matsilele said he regularly sends WhatsApp messages to clients in key markets in the Middle East, Turkey and India, reminding them of the beauty of South Africa and encouraging everyone during this time to look to the future. He also negotiated a postponement of some pre-booked trips to avoid cancellations. A credit holiday with some of the business financiers has also helped.

“The moment you sleep you don’t know what tomorrow will bring. It’s all about hoping,” said Matsilele.

Exactly when and how international travel will resume are unknown, but tourism businesses in South Africa and elsewhere are banking on pent-up domestic demand to restore their reeling industry once it’s safe—and permitted—to operate.

“COVID-19 is estimated to be with us for a while. One must adjust or adopt to the new normal,” said Matsilele. “So, we have to work together and win the confidence again of our clients that South Africa is open for business when the time is right.”

Published June 2020